With a background in economics and public policy, I've covered domestic and international energy issues since 1998. I'm the editor-in-chief for Public Utilities Fortnightly, which is a paid subscription-based magazine that was established in 1929. My column, which also appears in the CSMonitor, has twice been named Best Online Column by two different media organizations. Twitter: @Ken_Silverstein. Email: ken@silversteineditorial.com

Natural Gas Vehicles Driven to Outpace Oil

Image by Getty Images via @daylifeCall it the battle between brothers and barons: oil and natural gas, or the Koch Brothers versus Boone Pickens. Big Oil has won Round One but the supporters of a now-defeated bill to give alternatively-fueled vehicles a leg up are driven to outpace the petroleum-based competition.

Call it the battle between brothers and barons: oil and natural gas, or the Koch Brothers versus Boone Pickens. Big Oil has won Round One but the supporters of a now-defeated bill to give alternatively-fueled vehicles a leg up are driven to outpace the petroleum-based competition.

At issue is legislation that would attempt to ease the demand for foreign sources of oil by giving tax incentives worth $3.4 billion to $5 billion to those long haul trucks that convert from the traditional combustion engine to those that would run on natural gas. Making that switch comes with a cost — but one that is too high for conservative groups who say that these matters are best left to the free market.

“The tax code is riddled with subsidies that distort the market and allow the heavy hand of government to tip the scales in favor of some industries, and against others,” writes the Heritage Foundation that worked to beat back last Tuesday the NAT GAS Act.

Now that gas is $4 a gallon, Americans are clamoring for relief. Enter President Obama, who outlined his administration’s plan to ease the demand for foreign crude by increasing the use of all alternatively-fueled vehicles here during a visit to a Daimler truck factory in North Carolina.

To that end, his plan would give $1 billion to create the infrastructure to support a massive switch in the way people travel. The money would go first to select communities. Beyond that, President Obama would increase the tax grants given to buyers of alternatively-fueled vehicles from $7,500 to $10,000. The president would furthermore give a 50 percent tax credit to those 18-wheelers that switch to natural gas or electricity.

While his measure had been endorsed by Democrats and Republicans alike, it still collapsed largely along party lines. But Boone Pickens fired back and quickly tried to rally the congressional troops for Round Two. To that end, he is arguing that the tax incentives would be temporary and last only until this fledgling industry has planted its feet. He specifically criticized the Koch Brothers, essentially calling them hypocrites who have profited from a highly subsidized and politically potent ethanol industry.

Sponsors of the NAT GAS Act are saying that they will revise their measure in a way to attract the necessary votes. The good news for supporters is that a majority of the U.S. Senate voted in favor: 51 to 47. But because it was included as an amendment to a highway bill, it required 60 to pass. On the House side, meanwhile, the measure has 180 co-sponsors.

“Natural gas is cheap and abundant here in America,” says Senator Robert Menendez, D-NJ, who co-sponsored the natural gas bill with Senator Richard Burr, R-NC. “Instead of exporting this fuel abroad we should be using it right here to displace oil.”

Despite the bipartisan backing, getting the revised bill passed won’t be easy. Aside from the argument that government has no business trying to pick winners and losers, the opposition is coming from the manufacturing and chemical industries that don’t want limited fuel supplies diverted to the transportation sector. That would drive up prices at a time when those companies are starting to rebound.

To sway those heavy industries, NAT GAS Act supporters say that they would disallow the use of natural gas drilled here to be sold outside the country. Such a move, however, would draw the wrath of energy producers that have large investments here in liquefied natural gas (LNG) plants — facilities that are underutilized now because of the shale gas boom. LNG is unlikely to be targeted for use by domestic long haul trucks years from now when it could head immediately to global power markets.

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The infrastructure to refuel your CNG car is already available and in place. The PHILL home compressor is available for $4,500 with a $1,000 tax rebate. It is placed in your garage to refuel at night.

The problem is that there are not much choices or options to buy a vehicle because of EPA restrictions. The only only CNG car is the Honda Civic GX and its not too fancy. For example, I live in Pittsburgh and the closest dealership that sells and services the GX is in Dubois, two hours away!

I would love to buy a CNG vehicle, but once again the government is getting in the way.

The infrastructure to refuel your CNG car is already available and in place. The PHILL home compressor is available for $4,500 with a $1,000 tax rebate. It is placed in your garage to refuel at night.

The problem is that there are not many choices or options to buy a vehicle because of EPA restrictions. The only only CNG car is the Honda Civic GX and its not too fancy. For example, I live in Pittsburgh and the closest dealership that sells and services the GX is in Dubois, two hours away!

I would love to buy a CNG vehicle, but once again the government is getting in the way.

Well, this sounds like Tweedle-dee versus Tweedle-dum. Everybody is for free markets until there are opportunities for them to get a leg up on the competition or a subsidy the would improve their profits. The Koch brothers are just like everybody else, there oughta be a law again it, unless it benefits me. What this illustrates to me is the inability of this country’s industries to do the right thing. We’re importing oil because we use more than we need. We have natural gas out the kazoobie. It is a better fuel than oil produces. Why not use it? The reason there seems to be conversion costs money. Yes it does, but the necessary parts and processes have already been developed and are in use for going to natural gas. Most of the costs would be in providing fueling stations more conveniently. The holdup in doing this is the investment big oil has in continuing with oil. This is simply a matter of OIL doesn’t want to give up the retail part of the business. There wouldn’t be any loss shipping the oil based products we produce in refineries to other countries. We’re no longer importing oil and subject to the vageries of the middle east and North sea. There is no hesitancy to pay Congress to to keep the status quo because they don’t want to change. OIL doesn’t care if it would be good for the country, they are willing to screw the whole country for their benefit.

We have been subsidizing oil for decades with blood and billions in the Middle East. This investment makes more sense than anything else we could possibly do. It will moderate gasoline prices, and give those who convert a lower cost of fuel. We also need the exports. It is a huge win for our economy.